With the advent of the Internet, digital technologies have empowered customers to play a more active and demanding role. Companies need to be efficient and robust in their organizational operations now. With the amount of organizational work increasing day by day, sometimes companies resort to business process outsourcing solutions which involve contracting of a specific business task to a third party provider so that companies can focus more on core activities and work efficiently. Outsourcing is not a new concept to pharmaceuticals because manufacturing capacity and clinical trials are frequently outsourced. Non-core support functions such as HR, finance, and IT are also outsourced. Outsourced contract research and contract manufacturing have become the standard for many pharmaceutical organizations. The pharmaceutical outsourcing market on a global level is segmented into:

Products

Raw material sourcing

Active pharmaceutical ingredient

Finished drugs

Services

Drug discovery

Pre-clinical development

Clinical trials

Biology research

The global pharmaceutical contract services industry faces many challenges and changes. Outsourcing Pharma.com conducted a state-of-the-industry survey of pharmaceutical industry professionals including sponsor companies and contract research, development and manufacturing organizations. The participants of the survey included representatives from Baxter, Hospira, BASF, PPD and Quintiles IMS, among others. The main objective of the survey was to measure the current state of the global pharmaceuticals outsourcing market and evolving relationship of those involved. The survey collected response from 363 readers about topics such as market conditions and investments, partnering trends and challenges. Last year’s survey presented many challenges for the industry but with this survey the respondents felt more positive.

The pharmaceutical industry has come up with various initiatives over the past year, many of which focus more on the patient.

More than half of the respondents agreed that these initiatives will bring more transparency and also improve the confidence of the consumers.

16% strongly disagreed with this view.

80 percent of the respondents agreed that the current political environment is creating challenges for the industry and many others agreed that a rising amount of negative news caused difficulties for the industry.

Majority of the respondents agreed that they had difficulties filling key roles at their company during the last year.

When asked if the company will take on more staff this year,

16 percent strongly agreed

42 percent agreed

More than half also agreed that their company is planning more capital investment this year than last year. The company expects profit margins to improve as well.

41 percent noted that that their company made acquisitions in the past year.

As per future purchases, less than half i.e. 38 percent agreed that their company would likely make an acquisition within the next year

24 percent were unsure.

Among the survey respondents, emerging markets was most often cited as a category of growth drivers. North America and Western Europe dominated as the two most important markets for both pharmaceutical companies and suppliers. Japan was third with 31 percent, followed closely by China, India and South East Asia.

Almost 44 percent of respondents representing pharmaceutical manufacturers said yes to outsourcing more this year than last year, and 37 percent said they will outsource the same amount as last year. From the supplier’s viewpoint, 66 percent said that they expect to see more companies planning to outsource business this year and 23 percent expect the same amount of business. Only 11 percent of pharmaceutical manufacturers said their company will bring more business back in-house. Analysts point out that preferred provider relationships could struggle under pharmaceuticals company consolidation.

Around three fourth of survey respondents “disagreed” with the viewpoint that working with a preferred provider is less important to their company.

73% “agreed” that they would continue to work with more than one preferred provider

Less than half agreed that M&A activity affected their preferred provider choices.

Qualities pharmaceutical companies look for in a contract service company include the following.

Competitive pricing – 62.8%

Specialization/niche capabilities – 56.4%

Ability to meet short deadlines – 52.6%

Superior customer service – 46.2%

Knowledge of multiple regulatory environments – 42.3%

A similar company culture – 23.1%

A global footprint – 16.7%

Persistence Market Research says that during the period 2016 – 2024, the pharmaceutical outsourcing market will continue to witness a shift towards developing biopharmaceuticals rather than drugs. This is because the former offers better profits and protection against generic competition. The market will witness dramatic growth during the forecast period, almost double, in the amount of biopharmaceutical products such as bio better, bio-similar, and biogenetic varieties of current products enter world markets.

Thus business process outsourcing is poised to grow in the global pharmaceutical industry. Some of the factors driving the global pharmaceutical outsourcing market are reducing costs, improving efficiencies, ensuring business continuity, reducing staff, allowing staff to focus on the core competency, and reducing risk through using specialists.

About Rajeev R

Manages the day-to-day operations of MOS from NY. With an interest in information technology, Rajeev has guided MOS to extensive use of digital technology and the internet that benefits MOS as well as MOS clients.
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